DESPITE an 11% gain is US Dollar Gold Prices, worldwide supply of recycled scrap gold fell in 2011, according to a report from leading precious metals consultant Thomson Reuters GFMS.

Data published this week in Gold Survey 2011 Update 2 show that global supply of scrap Gold Bullion fell 2% last year, with GFMS forecasting a further 3.1% drop in the first half of 2012.

The Middle East and India saw some of the largest falls, even though these regions saw some of the biggest gains in Gold Prices. In India for example, Gold Prices in the world's largest gold market hit all-time highs towards the end of last year as the Rupee fell to record lows against the Dollar, yet scrap gold supply fell by nearly 30%.

GFMS attributes the drop in scrap supply "chiefly to price acclimatization, near market stock depletion and expectations of higher prices."

An exception was Europe, where scrap supplied responded positively to higher Gold Prices, rising 12% last year to a record 383.5 tonnes.

Gold Prices in Euro terms rose 14% last year.

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